21 Apr 2025 2 min read Minnesota

U.S. Education Department to restart defaulted student loan collections

"The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear." -- U.S. Secretary of Education Linda McMahon

U.S. Education Secretary Linda McMahon speaks at a press conference organized by House Democrats outside the U.S. Department of Education headquarters in Washington, D.C., on April 2, 2025. (Photo by Shauneen Miranda/States Newsroom)

By Shauneen Miranda

WASHINGTON — The U.S. Department of Education said Monday that it will resume collections May 5 for defaulted federal student loans.

After pausing during the early weeks of the COVID-19 pandemic, the agency has not collected on defaulted loans in over five years. More than 5 million borrowers sit in default on their federal student loans, and just 38% of borrowers are current on their payments, the department said.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” U.S. Secretary of Education Linda McMahon said in a statement Monday.

During last year’s presidential campaign, President Donald Trump criticized his predecessor and successor, President Joe Biden, for his efforts to erase student debt. McMahon resumed that line of attack Monday, blaming Biden’s administration for unreasonably raising borrowers’ expectations of forgiveness.

“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers,” McMahon said.

She added that “going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook.”

The department said the Office of Federal Student Aid will restart the Treasury Offset Program, which the U.S. Treasury Department administers, on May 5.

The Education Department statement said all borrowers who are in default will get emails over the next two weeks “making them aware of these developments and urging them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.”

The department said the Office of Federal Student Aid will “send required notices beginning administrative wage garnishment” later this summer.

More than 42.7 million borrowers owe more than $1.6 trillion in student debt, according to the department.

The administration claims that “instead of protecting responsible taxpayers, the Biden-Harris Administration put them on the hook for irresponsible lending, pushing the federal student loan portfolio toward a fiscal cliff.”

Minnesota Reformer is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor J. Patrick Coolican for questions: info@minnesotareformer.com.